MORTGAGE COMPARISON

15 vs 30 Year Mortgage

$120,000 Home Purchase

15 Year Mortgage30 Year MortgageDifference
Interest Rate - 4.00%Interest Rate - 4.375%
P&I Payment = $888P&I Payment = $599$289
Balance after 7 years = 72,820Balance after 7 years = $104,106$31,286

Financing this home purchase on a 15 year term would save $31,286 after 7 years, which is the average time that someone stays in their home. For an extra $289 per month, you could save over $30k in interest. Smaller payments are nice for the budget but cost you in the long run.

Now lets look at what happens when after 7 years when you want to upgrade to a bigger house.

Down Payment for New Purchase

The average home appreciates about 5% per year here in Oklahoma. Based on that, the value of the $120,000 home purchased 7 years ago is now worth about $165,000.

15 Year Mortgage30 Year MortgageDifference
Original Purchase = $120,000
Balance owed after 7 years = $72,820
Original Purchase = $120,000
Balance owed after 7 years = $104,106
Down Payment on new purchase
Down Payment on new purchase
$165k value - $72,280 balance
$165k value - $104,106 balance
Down Payment = $92,720
Down Payment = $60,894
$31,826

If we chose the 30 year mortgage option originally, we now have $31,826 less for a down payment on the purchase of our next home.

Let’s see how that continues to affect our next home purchase.

$250,000 Home Purchase

15 Year Mortgage
30 Year Mortgage
Difference
$250k - $92,720 down payment
$250k - $60,894 down payment
New mortgage = $157,280
New Mortgage = $189,106
$31,826
P&I Payment = $1163
P&I Payment = $944
$219
Total Payback = $209,409
Total Payback = $339,904
$130,495

The interest savings on the 15 year mortgage continues to save you big money on the second home purchase with over $130,000 in a total savings, with a payment increase of only $219 per month.

Plan Ahead and Save Big!

Prepare before you decide to buy a house


  • Make a budget and stick to it.
  • Reduce debt to maximize mortgage payment.
  • Save money – 5% down payment plus closing costs.
  • Educate yourself on the local real estate market.
  • Get preapproved to know exactly what you can afford.
  • Work with a realtor to negotiate the best deal.

Get started with Focus today and enjoy the benefits of membership!

Get started with Focus today and enjoy the benefits of membership!